Radian Group Inc. · NYSE:RDN
Radian — Q3 2007 Earnings Presentation
21 slides from Radian's earnings presentation, Nov 1, 2007
Slide 1: Third Quarter 2007
Exhibit 99.2 Third Quarter 2007
Slide 2: Safe Harbor Statement
Safe Harbor Statement All statements made during our third-quarter conference call and in the accompanying presentation that address events or developments that we expect or anticipate may occur in the future are “forward-looking statements” within the meaning of Section 27A of the Securities Act of
Slide 3: Business Segment Structure
Business Segment Structure Radian Financial Financial Mortgage Financial Guaranty Guaranty Insurance Services Radian Radian Asset Asset Radian C-BASS Sherman Assurance Assurance Inc. Inc. Guaranty Inc. 22% Interest 46% Interest (AA/Aa3/AA) (AA/Aa3/AA) (AA/Aa3/AA) Radian Radian Asset Asset Radian Rad
Slide 4: Financial Highlights
Financial Highlights As of 9/30/07 Assets $8,214.9 Loss reserves $1,094.7 Unearned premiums $1,045.3 Stockholders’ equity $3,447.5 Market capitalization $1,872.4 Debt to capital ratio 21.6% Book value per share $42.86 Dollars in millions. 4
Slide 5: 3rd Quarter 2007 Book Value Change
rd 3 Quarter 2007 Book Value Change Total Per Share 6/30/2007 Book Value $4.1 B $ 51.53 BV per After-tax share EPS Pre-tax impact impact impact (1) C-BASS Impairment (468) (304) (3.78) $ (3.78) NIMS mark-to-market (366) (2) (238) (2.96) (2.96) Financial Guaranty mark-to-market (256) (166) (2.06) (2.
Slide 6: Diversification
Diversification Risk In Force/ Net Par Outstanding by Product RIF/Net Par Outstanding as Percent of Business Line Product of 9/30/07 Porfolio Financial Guaranty Direct Public Finance $47,704.1 30% Public Finance Reinsurance 41,592.6 27% Direct Structured Finance 18,168.9 12% Structured Finance Reins
Slide 7: Total Loss Reserves
Total Loss Reserves 1,094.7 $1,100 $1,000 209.7 $900 842.3 840.9 $800 790.4 801.0 801.0 189.1 189.7 $700 241.4 204.8 588.6 624.6 276.9 $600 123.2 139.9 $500 885.0 $400 $300 596.2 653.2 651.2 513.5 559.6 465.4 484.7 $200 390.0 $100 $0 2000 2001 2002 2003 2004 2005 2006 3Q 2006 3Q 2007 Mortgage Insura
Slide 8: Primary Mortgage Insurance Risk in Force by Product
Primary Mortgage Insurance Risk in Force by Product Primary RIF by Product 100% 80% 60% 40% 20% 0% Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Prime 68.7% 69.3% 68.9% 69.8% 70.8% 71.9% 71.8% 70.9% 71.1% Alt A 17.7% 17.5% 17.5% 17.3% 17.0% 16.7% 17.3% 18.5% 18.6% A minus 10.7% 10.5
Slide 9: Primary Mortgage Insurance Default Rates by Prime, Alt A and SubPrime
Primary Mortgage Insurance Default Rates by Prime, Alt A and SubPrime 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Primary Total Primary Prime Primary Alt A Primary SubPrime 9
Slide 10: Financial Guaranty Net Par Outstanding by Product
Financial Guaranty Net Par Outstanding by Product $112.8 billion as of 9/30/07 $55 $50 47.7 46.9 $45 41.4 39.6 $40 36.5 $35 $30 $25 21.6 $20 18.2 $15 13.2 15.1 $10 $5 $0 Reinsurance Direct Public Finance Direct Structured 9/30/2005 9/30/2006 9/30/2007 Dollars in billions. 10
Slide 11: Financial Guaranty Product Line and Sector Mix
Financial Guaranty Product Line and Sector Mix $112.8 billion in net par outstanding as of 9/30/07 Public Finance Structured Finance Sector Percent Sector Percent Education 3.8% Asset-backed – 1.1% General obligations 16.9 commercial and other Healthcare 9.4 Asset-backed –consumer 1.2 Housing 0.6 As
Slide 12: Financial Guaranty Net Par Outstanding by Rating
Financial Guaranty Net Par Outstanding by Rating $112.8 billion in net par outstanding as of 9/30/07 BIG NR BBB 1% 1% AAA 18% 44% A AA 19% 17% * Indicated ratings category reflects the highest rating assigned to the underlying obligation from the three rating agencies (S&P, Moody’s and Fitch), or, i
Slide 13: Financial Guaranty Public Finance Net Par Outstanding by Rating
Financial Guaranty Public Finance Net Par Outstanding by Rating Direct and Assumed $51.8 billion in net par as of 9/30/06; $59.8 billion in net par outstanding as of 9/30/07 9/30/06 9/30/07 BIG AAA NR BIG 2% 3% AAA BBB 1% 3% NR BBB 3% 29% 0% AA 29% AA 30% 31% A A 34% 35% * Indicated ratings category
Slide 14: Financial Guaranty Structured Net Par Outstanding by Rating
Financial Guaranty Structured Net Par Outstanding by Rating Direct and Assumed $44.3 billion in net par as of 9/30/06; $53.0 billion in net par outstanding as of 9/30/07 9/30/06 9/30/07 BIG AA A BBB 0% NR BBB BIG NR 2% 5% 1% A 3% 2% 6% 1% 3% AA 5% AAA AAA 82% 90% * Indicated ratings category reflect
Slide 15: Non-CDO RMBS Portfolio: Breakdown by Asset Type
Financial Guaranty Non-CDO RMBS Portfolio: Breakdown by Asset Type $1,013 MM Domestic RMBS as of September 30, 2007 Total % of % % % Assumed 2006/2007 Net Par RMBS AAA AA A BBB* BIG** Direct from AAA Vintage Outstanding Portfolio Primaries $154 MM $427 MM $581 MM SubPrime 57% 7 Policies 175 Policies
Slide 16: CDO Portfolio
Financial Guaranty CDO Portfolio $46.8 Billion Net Par Outstanding as of September 30, 2007 Direct exposure ($44.9 billion; 96% of CDO exposure): • Synthetic Corporate CDOs attach at the AAA level or higher, with an average attachment point of 2.6x the AAA level and a weighted average tenor of 6 yea
Slide 17: CDO Portfolio: Ratings Downgrade Impact Analysis
Financial Guaranty CDO Portfolio: Ratings Downgrade Impact Analysis • Radian Asset has three CDOs of ABS with net par outstanding of $760.8 million, of which 2 are rated AAA ($660.8 million) and 1 is rated BBB ($100 million). • The BBB rated transaction is the market value extendible note program di
Slide 18: CDO of ABS, CMBS, and Multi-sector Portfolio Table
Financial Guaranty CDO of ABS, CMBS, and Multi-sector Portfolio Table As of September 30, 2007 Type of Collateral as a Percentage of Total Pool as of Sept 30th 2007 Investment High Yield Total Radian Asset % RMBS % Sub Year Legal Final Net Par Subprime CDO of CDO of S&P Moody's Original AAA Insured
Slide 19: Adjusted Gross Written Premiums (AGWP) Growth
Financial Guaranty Adjusted Gross Written Premiums (AGWP) Growth* Direct Business Only $200 $180 176.5 $160 $140 138.9 $120 112.2 $100 90.1 $80 64.3 $60 48.8 $40 $20 $0 9M 9M 9M 9M 9M 9M 2006 2007 2006 2007 2006 2007 Structured Finance Public Finance Total Direct Dollars in millions. *Includes upfro
Slide 20: Reconciliation of Adjusted Gross Written Premiums
Financial Guaranty Reconciliation of Adjusted Gross Written Premiums Direct Only to Net Premiums Written (Insurance and Derivatives) Deduction Addition Deduction Total Present Value Installment Premiums Ceded Additions Adjusted Gross of Estimated Future on Policies Written Premiums on and Net Premiu
Slide 21: RADIAN
RADIAN Changing the nature of risk: